Using
the information from BE22–10 for Azure Corporation, prepare the cash flows from
operating activities section of Azure’s 2011 statement of cash flows using the
indirect method.
In
BE Azure Corporation had the following 2011 income statement data:
Sales $205,000
Cost
of Goods sold 120,000
Gross
Profit 85,000
Operating
expenses (including depreciation $21,000) 50,000
Net
Income $35,000
The
following accounts increased during 2011 by the amounts shown: Accounts
Receivable, $17,000; Inventory, $11,000; Accounts Payable, $13,000; Mortgage
Payable, $40,000.
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Cash
flows from operating activities
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Net income
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$35,000
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Adjustments to reconcile net income
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to
net cash provided by operating
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activities:
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Depreciation expense
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$21,000
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Increase in accounts payable
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13,000
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Increase in accounts receivable
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(17,000)
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Increase in inventory
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(11,000)
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6,000
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Net cash provided by operating activities
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$41,000
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